Inequality isn't inevitable. Well, at least not all of it.
That's the lesson from Council of Economic Advisers Chair Jason Furman's chart above. It compares the top 1 percent's share of income, before taxes but excluding capital gains, from across the developed world. And, as you can see, American exceptionalism is alive and well: the United States has more top-end inequality than any other rich country, and it isn't even close. Indeed, there's just as big a gap between the United States and the United Kingdom, which has the second-most inequality, as there is between the United Kingdom and France, which has the least here.
Rising inequality, in other words, isn't only due to big-picture things like technology and globalization. If it were, we'd see pre-tax inequality increasing about the same amount everywhere. So what's going on? Well, other policies matter too. Financial deregulation lets Wall Street take more risks and make more money (at least in the boom years). Weak corporate governance lets CEOs turn their boards into sinecures that only exist to rubber stamp pay packages. And lower minimum wages tend to boost profits — which then end up in executives' pockets.
But part of this is cultural. We live in a society that's turned an anti-hero's motto — greed is good — into our own. It seems quaint now, but there used to be executives who turned down big bonuses they thought were too extravagant. People like Mitt Romney's dad. Nowadays, though, CEOs aren't quite so sentimental. Although maybe that's due, in part, to the fact that it costs more today. When top tax rates are so much lower than they used to be, you see, there's a much bigger incentive to grab as big a bonus as you can right now.
The bad news, then, is that the U.S. has more inequality than any of our peers. But the goods news is that we don't have to. It's our choice.